Ladies and gentlemen, thank you for standing by, and Welcome to AptarGroup's 2020 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Introducing today's conference call is Mr. Matt DellaMaria, Senior Vice President, Investor Relations and Communications. Please go ahead, sir.
Thank you, and welcome everyone. Participating on our call today are Stephan Tanda, President and Chief Executive Officer, and Bob Kuhn, Executive Vice President, Chief Financial Officer, and Secretary. You can find a copy of our press release as well as results on our website. If you are following along on the website, you can advance the slides by hovering and clicking on the arrows on the right and left. The replay of this conference call is on our website. Today's call includes some forward-looking statements. Please refer to our SEC filings to review factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements. AptarGroup undertakes no obligation to update the forward-looking information contained therein. I would now like to turn the conference call over to Stephan.
Thanks, Matt, and good morning, everyone. Thank you for joining us. Let me start by expressing my hope that you and your families are continuing to do well and staying safe during this difficult time. I would also like to take a moment to thank our global workforce for the tremendous dedication and commitment they have shown. I am extremely proud of how the entire organization has risen to the challenge so that we could maintain our production of critical drug delivery and dispensing systems for patients and consumers around the world. I would like to share a few updates related to COVID-19 starting on slide three. We are proud to live up to our purpose and responsibility to society, and as previously shared, we are an essential supplier to several critical industries, including pharmaceuticals and consumer products.
Our teams are further motivated by our customers for honoring our commitments to them. To that end, we are constantly adapting our approach, and we've recently issued new remote and flexible work guidelines to ensure the minimum number of essential on-site employees during. We're also thinking of what's coming next to address the future of work, including the future of customer engagement in the new normal of the post-COVID-19 era. Turning now to slide four, our global solutions, which are critical to our drug delivery, dispensing, sealing, and active packaging solutions, sanitizers, cleaners, food, and beverage products. Turning to slide five, I would like to offer a few comments on the quarter. Our pharma business delivered another strong performance. Core sales grew in our injectables, consumer healthcare, and active packaging businesses, offsetting declines in prescription, which faced a challenging comparison to the very strong quarter two of last year.
The Pharma team continues to engage with customers and evaluate potential opportunities related to COVID-19. The situation is very fluid, and it is difficult to say which drugs will eventually be approved and when. At the same time, it is very reasonable to expect that we will benefit in line with our market share from the rise in the injectable business to be expected by the coming wave of COVID-19 vaccines. We expect to also benefit from increased demand for traditional vaccines and therapies that may have been delayed because of the initial crisis. Our Pharma segment is expected to remain a reliably growing business during this pandemic, as we are well diversified across different healthcare end uses that are not COVID-19 related. U.S. FDA approvals featuring active material science technologies is featured on an implantable rechargeable device used to treat urinary and bowel dysfunction by Axonics Modulation Technologies.
Our technology helps to protect key elements inside the device. The second recent U.S. FDA approval is for a New Drug Application, Qymari, which features our multi-dose nasal pump for the first and only nasally administered treatment in recurrent diabetic gastroparesis. This is another good example of a unique nasal treatment option that, unlike oral medications, bypasses the diseased gastrointestinal tract, allowing the drug to enter the bloodstream directly. Turning to a recent eye care product introduction, our three ml squeeze dispenser is featured on allergy and dry eye products from Saval in Latin America. Turning to beauty and home. The beauty market continues to be quite challenging, even though our shipments increased in June relative to the first two months of the quarter, related to the re-openings of several countries, including the U.S.. Demand for hand sanitizers and cleansers remains strong.
Because of this, we grew sales to the personal care market over the prior year. I would also like to highlight that our spray pump is featured on a line of Saval hand sanitizer sprays by Unilever. We also donated 50,000 of these pumps to support Unilad. Our pumps enclosures are also featured on numerous hand sanitizer products around the world, and we are investing in new tools, molding equipment in this time. Our closure and SimpliSqueeze valve was chosen by Dial for innovative body wash in an easy-squeeze standup pouch. Our technology provides controlled, drip-free dispensing even when the flip-top is open. This product is available for purchase on Amazon. Continued flexibility is important to our customers, and we are maintaining a state of readiness for the upturn. We have operating overhead costs that we must absorb while we are reducing some labor, travel, and other costs.
Turning now to food and beverage. Sales were negatively impacted by a decline in on-the-go beverage closure sales due to the COVID-19 crisis, as well as the passing on of lower resin costs to customers and lower custom tooling sales. Turning to product launches, the flexible space continues to have good momentum. Our closure with SimpliSqueeze Valve is providing clean and controlled dispensing for a major peanut butter brand, which has just launched an innovative standup pouch. Our closure and SimpliSqueeze Valve for inverted packaging are also found on the launch of a new line of signature sauces and condiments by Chick-fil-A in the U.S. Beverage market, our sports closure is found on a new sports drink by Xiaoyangren in China. Before I turn the call over to highlights as shown on slide six.
A few great start, and we benefit from their tremendous agility to adapt rapidly to the changing beauty demands, as well as their sophisticated consumer insights and marketing approach. Subsequent to the end of the quarter, we issued our 2019 sustainability report, which highlights our sustainability aspirations, safety programs, societal impact of our products, and community outreach initiatives. We are very proud of our accomplishments, and I encourage you to review that report that is available on our website. We are also pleased to welcome Kimberly Chainey to Aptar as the Executive Vice President and Global General Counsel. Her breadth of experience across multiple industries as the lead attorney for Global 100 and Fortune 500 companies for global mergers and acquisitions, strategy, innovation, intellectual property, and compliance will strengthen our leadership to achieve our strategic priorities.
With that, I will now turn it over to Bob, who's going to provide.
Thank you, Stephan, and good morning, everyone. Concerning our second quarter results and the impact of the COVID-19 pandemic, starting with slide seven. For the second quarter 2020, reported sales declined 6% and were negatively impacted by changes in currency exchange rates and lower resin costs to customers and impacts. Coming from recent acquisitions helped to offset the headwinds coming from the changes in currency rates. Core sales also declined 6%. Taking a look at our segment performances, our Pharma segment achieved core sales growth of 6% and an adjusted EBITDA margin of 35%, compared to a very strong second quarter a year ago. Looking at sales growth by market on a core basis, core sales to the prescription market decreased 6% due to lower tooling sales and a difficult comparison to the prior year. Core sales to the consumer healthcare market increased 10%.
Strong demand for our products used on nasal decongestant and cough and cold treatments were the reasons for the growth. Core sales to the injectables market increased 26% due to increased demand across a variety of applications. Core sales to the active packaging market increased 21% due to strong growth in our probiotics, diabetes, and Activ-Film products. Turning to our Beauty and Home segment, core sales decreased 13% due to the negative impact of COVID-19. The significant negative effects of COVID-19 on the beauty market were partially offset by an increase in sales to the personal care market. Home's adjusted EBITDA margin was 8% in the quarter and was negatively impacted by the sales decline in the quarter.
Looking at sales growth by market on a core basis, core sales to the beauty market decreased 33% due to a significant reduction in orders from customers providing both prestige and masstige beauty products, mainly in the travel retail and standard retail settings. Many beauty stores closed throughout the quarter in response to government shelter-in-place regulations. Core sales to the personal care market increased 11% as increased sales of our products used on personal cleansing products, mainly for hand sanitation products, more than offset continued softness in our deodorant, hair care, and sun care applications as consumers adhered to shelter-in-place orders. Core sales to the home care market decreased 5% as higher demand for our household cleaner products was not enough to care in automotive products.
Turning to our food and beverage segment, core sales decreased 15% in the quarter due to the passing on of lower resin costs to our customers, lower tooling sales, and lower beverage closure sales related to the COVID-19 crisis. The food and beverage segment achieved an adjusted EBITDA margin of 18%. Looking at each market, while sales of our closures to the food market increased 3%, lower tooling led ultimately to a core sales decrease of 3% as we recognized several large tooling projects during the second quarter of the prior year. Quarter sales to the beverage market decreased 37%, 7% of which is due to lower tooling sales. Demand for our closures for single-serve bottled water and on-the-go functional drink products was significantly affected by COVID-19 impacts. Turning to slide eight, second quarter adjusted earnings per share totaled $0.80. Prior year comparable earnings per share totaled $1.14.
Slides nine and 10 cover our year-to-date performance and show the full and adjusted earnings per share, which was down 21% from the prior year. Slide 11 shows sensitivity analysis that we showed in the first quarter, and it is still relevant as we move forward. Slide 12 outlines our outlook for the third quarter. The recent spike in COVID-19 cases in many regions of the world creates economic uncertainty in some of our markets. Our outlook is heavily dependent on the pace and breadth of resumption of air travel, the reopening of retail confidence, and we expect to see a gradual improvement in the second half of the year. I will share a few more details around our cash flow and CapEx and then turn the call over to Stephan for closing remarks. In the quarter, reported cash flow from operations was strong and totaled approximately $143 million.
Capital expenditures were approximately $61 million, and as shown on slide 13, our free cash flow was $81 million compared to $70 million in the prior year. We continue to have a strong balance sheet, and on a gross basis, debt to capital was approximately 44%, while on a net basis, it was approximately 39%. In addition, we continue to evaluate and challenge our capital expenditure needs and are forecasting a range of $230 million-$250 million. At this time, Stephan will provide a few comments before we move to Q&A.
Thank you, Bob. To close, I would like to cover a few key takeaways as can be seen on slide 14. While there is uncertainty due to the effects of COVID-19, we continue to invest in our company for the long term. Our cash generation remains strong, and our product innovation serves the greater good of society. The initial re-openings resulted in improved demand for some of our products, including beauty products, towards the end of the second quarter. We will continue to monitor the evolving status of the pandemic, as well as the trajectory of re-openings by country and by state. As we manage our company for the long term, we will continue to focus on providing tangible value to patients, consumers, and our customers, made up of many of the world's leading brands. Now I would like to open up the call for questions.
Ladies and gentlemen, to ask a question, please press star, then the number one on your telephone keypad. To withdraw your question, press the pound key. In the interest of time and fairness to all participants, please limit yourself to two questions and one follow-on question. You can come back into the queue if you have more questions as time allows. Your first question comes from Ghansham Panjabi with Baird. Your line is open.
Hi, good morning, everybody.
Hi, Ghansham.
Morning, Ghansham
Yeah. Stephan, maybe you could just expand on your comments related to the COVID-19 vaccine and obviously the supply chain has to position for any sort of vaccine. There's obviously a lot of people on the planet, and there's only so much supply. How are your customers kind of managing the buildup of inventory ahead of that? Just more broadly touch on COVID-19 activity as it relates to that segment.
Sure. Thanks, Ghansham. Look, as you're all aware, there are many hundreds of projects going on. We are following all of them closely. Of course, you see the big ones in the headlines, Moderna, Pfizer, AstraZeneca, Sanofi just this morning. Also in China, Sinovac, CanSino, many, many more. About a 1/3 of our COVID-related projects are vaccine-related, 2/3s are treatment-related. We have additional projects in the nasal inhalation space as well as respiratory space. The activity is tremendous. There is also displacement of traditional business, like the traditional flu vaccine assets are being rededicated to COVID. You have the question of SKUs, coated, non-coated, prefilled syringe or vial. There are many moving parts. We're in discussions with many of our clients on that.
We're not going to comment on any individual project, as I mentioned in my remarks, the safe assumption here is that we will benefit from the uplift in business related to COVID-19 in line with our market share in the injectable space. Clearly it is an active space, and like everybody else, we are following it very closely.
Okay. In terms of the Beauty and Home segment, I think Bob mentioned that Beauty was down 33% core sales in the quarter. Can you just sort of break that out by month? Related to that, just touch on the decremental margins in 2Q for that segment, because it looks pretty significant. I assume some of that is just inventory drawdown, but just help us bridge the two quarters year-over-year.
Let me take the first part and then Bob cover the second part. Clearly, April was the low point. Some improvement in May, June was a very good month as the effective reopening around the world, especially Europe and the U.S., made its impact. We also see continued good momentum into July. What you really see is the effect here of two not great months and one solid month. I'll let Bob address the margin side.
Sure. I think it's important to keep in mind that of the three segments, Beauty and Home has the widest and most diverse product offering. As a result, has more facilities than the other segments. When you have particular parts of that market, in this case, the beauty market, as you referenced, Ghansham, being down 33%, you've got big portions of dedicated factories which are running clearly below a break-even for some facilities which are running. Stephan mentioned you have a couple of months, but we've mentioned several times before, we entirely offline. We do have to certain of those factories because that really.
Thanks so much.
Your next question comes from George Staphos with Bank of America Securities. Your line is open.
Hi, everyone. Good morning. Thanks for all the details. Stephan, I was wondering if you could maybe dig a little bit deeper into your COVID project activity. I think on the last call you had mentioned there were something around 50 or so serious projects. That's my phrasing. You might phrase it a little bit differently. In more recent discussions you had mentioned you're working on around 75. Is there a way that you can update us on where those projects stand currently? Are you at the 75 or a higher level? Relatedly, from what you're seeing from customers, do you think the dosage per packs will be low single digits or high single digits per pack? Just trying to get a size for market with COVID when it ultimately occurs.
Sure. I'll try to add a bit more color to what I mentioned in response to Ghansham's question. Look, of course, the numbers are trending up. I think we said before there were hundreds of COVID-19-related projects in the industry. Now this is probably above 1,000. The ones that are relevant for us are certainly now also well above a couple of hundred. The 75 number certainly has gone a bit higher. Let me not get into that. More is certainly higher than 75, approaching triple digits. In terms of your question around doses by geography, in the U.S., it's likely that you get multi-dose vials, and whether it's below five or close to 10, but certainly will be multi-dose vials. In other geographies, Asia, we believe there will be a significant part of that also in prefilled syringes. In Europe, it's a mix of both.
The other effect, of course, that I try to paint at, a lot of the traditional flu vaccine capacity is being repurposed in the industry towards COVID. A lot of that traditional flu vaccine capacity is prefilled syringe, and there is a realignment of the supply chain for the traditional flu vaccine, which also provides opportunity. Again, it's an active space, and we will participate well in line with our market share.
Thanks, Stephan. My related follow-on and the other question I'll turn it over. If the supply chain on traditional flu vaccines is being somewhat displaced by the increase in COVID-19 infrastructure that you mentioned, Ghansham was talking to, that would suggest there's potentially a larger flu season for you. We'd expect it anyway just because what's been happening, but also given that you're producing dispensers. Would it be sensible to expect a stronger flu season for AptarGroup? The other question, I know you're not going to guide, comment to margin by segment for any quarter, let alone third quarter.
Would it be fair to say, Bob, given where we are right now, no guarantees in life, obviously, that we should be seeing some sequential improvement in margin across the businesses off of the lows from two Q, particularly around Beauty and Home and Food and Beverage, where I'm going. Thank you.
Yeah. Look, this is terrible to say, but I don't know how to say it better. Always comes a season that tends to hold decongestants and so on. You may add here more flu vaccination and probably there's appendicitis that we suspect. Yes, unfortunately, if you're in the pharma business, if things are not going well in the flu season, that's good for the pharma business. I'll let Bob address the margin question.
Sure. Thanks for the follow on, George, because I did want to mention that the opposite of that detrimental comment that I made is that, when it does come back, the volume to, I would say, above that line, I think what we've done is we've done a tremendous amount of cost savings throughout the transformation. I think we're better positioned today for when the market does come back. Certainly, we're starting to see that in China, that beauty, in fact, is resilient and once economies are getting back to normal, we do see that beauty business bouncing back. As a reference point, if we look back to kind of 2009 when we were down significantly in the first three quarters and then for the year finished down 9% on top line.
The following year, we bounced back with an 18% core growth rate and 100% improvement on EBITDA. Once you get above that kind of break-even point, then you start to see the opposite effect on the incremental margin. I think what we're seeing here, George, is as we've highlighted before and continue to believe in, is if it snap back in the second half, it's going to be more of a gradual improvement. A dramatic improvement in the beauty and home margin, it's all really how quickly we can get back above that break-even point in some of those beauty factories. Once beyond that, then that's when I think we'll start to see some significant margin improvement.
Yeah. Maybe the other thing I would follow this COVID-19-related activity also creates some additional cost, some additional investment. We're also passing on some of that with price increases in the injectable space, and I think we did a few percentage in quarter two already.
Thank you, guys.
Again, to ask a question, please. Your next question comes from Neel Kumar with Morgan Stanley. Your line is open.
Hi. Thanks for taking my question. You talked about related to COVID are injectable applications. If you're ultimately chosen as a supplier, do you have available capacity to meet such demand? I know you increased your injectables capacity in France last year. I was wondering if you have any plans for further capacity additions, just given the growth potential there.
You can assume that we will increase our capacity in line with ours. Our capacity situation is really, you need to look into the details. Obviously, the beginning is the whole, then the product formation, stamping and so on, injection, and then the finishing, washing, coating. Then you overlaid on that different product types, stoppers, needle shields, plungers, and geographies. Then we have, of course, discussions with each customer and their supply chain, including the CMOs. We reserve certain capacities or commit certain capacities
In many cases, this will be a dual-source situation. Nobody wants to rely on a single supplier, when supply chain performance will be critical. Yeah, I think that's probably what I can say about that. Clearly, we will accelerate some of the investments in line with our position in the industry.
Great. That's helpful, Holger. You had a core growth decline in the prescription business for the pharma quarter. I know you had some tough comps year-over-year. Were there any areas that you called out that were particularly weaker? You also had some pretty strong growth in active packaging. I think you previously expected growth to moderate a bit for the quarter. Is there anything you can tell me that would drove the upside to meet your expectations there?
If you want, I can take that.
Yeah, go ahead.
Sure. The prescription side, we saw a little bit of softness on the allergic rhinitis, which we had kind of indicated before that we kind of peaked with the over-the-counter business and the volume growth there. Saw also a little bit of softness on the CNS side as well. There, that's partially due to difficult comps because we did have a couple big launches last year in this space. Those were really what we were referring to and what actually materialized on the prescription side. As it relates to active packaging, we were a little bit cautious with the strong diabetes vial sales that we experienced in the first quarter, and had some doubt whether that was going to continue or whether that was going to kind of level off. In fact, we did see it continue at a very strong level in Q2.
The other thing that we're seeing really exceptional growth in is, there's plenty of articles out there, that industry is doing quite well right now as people are trying to lead a healthier lifestyle. We are starting also to see some good traction on our active film projects as well. We'll see how the diabetes volume continues into the second half, but it did surprise us a little bit that it was continuing strong in Q2. Really, our Q2 mirrored very closely what Q1 was.
Again, to ask a question, please press star one on your telephone keypad. No further questions queued up at this time. I'll turn the call back over to Mr. Tanda for closing remarks.
Very good. Well, overall, I think we feel very good about the quarter and the performance at the bottom of the largest, in many generations, probably back to the Great Recession, down 40% in the U.S., close to 30%. We've done a lot of good work in preparing for the upturn. If history is any guide, we're very excited about the future. With that, I'll close the call, and we'll see you on the virtual road over the coming months.
This concludes today's conference call. You may now disconnect.